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EXAMPLES OF BUYBACK TRANSACTIONS
When Levi Strauss, the world’s largest maker of blue jeans, decided to expand its European operations, it began talks with the Government of Hungary. Hungary wanted to build a blue jeans plant but did not have enough hard currency to pay for it. The solution: Hungary bought equipment and expertise from Levi Strauss, and Levi Strauss agreed to buy back a share of the production. The company now takes 60 percent of the plant’s annual output, about one million pairs a year, which it sells in Europe and Africa.
Levi’s buyback agreement and variations on it, commonly called countertrades, are no longer isolated events. In fact, so many deals have been struck in the past three years that government officials, bankers, and industry analysts predict such commerce will account for 30 percent or more of all international trade.
WTE helped a client set up a $750M Aluminum plant without any capital investment on the part of our client through a buy-back arrangement. In this buy-back arrangement, the supplier built the plant and also supplied alumina (an oxide of aluminum found in bauxite and clay) to our client. In exchange, the supplier of the aluminum plant and alumina agreed to buy back 20% of the finished aluminum produced at the plant over the following ten-year period as payment for building the plant.
WTE helped a client to acquire a Copper Ore Processing plant worth $500 million with no money down. In exchange, the supplier agreed to buy back 25% of the plant’s production over the following fifteen-year period as payment.
A good illustration of a buy-back deal is the recent agreement between the Volkswagen Corporation and a German company. This agreement obliged VW to deliver a complete production line capable of producing 286,000 engines per year to the German company without the German company paying any money upfront. The cost of the production line and licensing agreements is to be paid through the delivery to VW of 100.000 motors per year.
WTE helped a client to acquire a methanol plant worth $235 million with no money down. In exchange, the supplier of the Methanol plant agreed to buy back 25% of the plants’ production over the following fifteen-year period as payment. The client acquired the $235M methanol plan without capital and without going to any investors, banks, or financial institutions.
An example of a buyback deal is the US $20-billion Occidental Petroleum ammonia transaction with a Russian company. Occidental assisted the Russians in financing and constructing ammonia plants and agreed to purchase quantities of ammonia produced by these plants over a twenty-year period. Several parties were involved in this buy-back transaction, and it involved investments (in the form of equity, capital equipment, loans, management, infrastructure support, and technology transfer). The suppliers financed the acquisition and construction. Brokers and switch traders were involved. Bankers acted as trustees of the fund until the final payment was made to the suppliers. WTE was not involved in this transaction.
COUNTERTRADE SUCCESS STORIES
success stories of our clients.
A petroleum company acquired new facilities worth $3.5 billion within 30 days with no money down.
A private jet charter company acquired 23 private jets worth $575 million with no money down.
An industrial product manufacturer acquired new machinery, equipment, and turnkey production facility worth $578 million with no money down.
A manufacturing company acquired a methanol plant worth $235 million with no money down.
An oil company recently acquired a modular oil refinery for crude oil with a 20,000 BPD production capacity with no money down.
Giovanni acquired a 123-year-old $250 million turnover company with 768 employees with no money down.
A steel manufacturing company got its plant capacity upgraded with an investment of $75 million to increase its production capacity with no money down.
8. One client got over a billion dollars in real estate that cost them — absolutely nothing!
9. Another client got $850M worth of office building, company cars, with no money down.
10. One of our clients averaged an extra $750,000,000-a-quarter profit off their countertrade deals.
I could tell you a lot more and have your eyes jump out…but it would fill 1000 pages … and I’m sure you get the idea.
You can achieve similar results via the CTf program below.